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Report: Climate change ambitions prove ‘pointless’ as fossil fuel consumption hits new highs

RIYADH: “Drastic and coordinated action” is needed to reduce global dependence on fossil fuels, the head of a climate think tank warned, after new analysis showed oil and coal consumption had reached record levels.

In a commentary on the latest edition of the Energy Institute’s Statistical Review of World Energy, co-authored with KPMG and Kearney, Romain Debarre, executive director of the Energy Transition Institute, stressed that green ambitions are “pointless” without action that has a direct impact on global warming.

Following global agreements such as the Paris Agreement and the decisions of COP28 in Dubai – which ended last December with a landmark agreement between 198 parties and ushered in a new era of climate action – countries around the world have committed to transforming their energy systems.

Despite these commitments, global primary energy consumption will increase by two percent in 2023, exceeding its ten-year average and pre-Covid-19 levels, the report says.

“COP28 and the rhetoric of world leaders on the energy transition demonstrate the ambition to reduce the world’s dependence on fossil fuels. But this ambition will be futile if it is not accompanied by drastic and coordinated action that has a real and immediate impact on curbing climate change,” said Debarre.

The report found that global oil consumption rose to unprecedented levels in 2023, largely due to the easing of China’s strict zero-COVID-19 policy.

In addition, coal consumption also reached new highs.

There were some signs that climate policy was having an impact: the share of renewable energy in total primary energy consumption increased by 14.6 percent, and nuclear energy increased the combined share of low-carbon sources to over 18 percent.

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The 73rd annual edition stated that as supply chain problems eased, most markets returned to their pre-2019 trends, making 2023 a year of remarkable recovery.

“The Asia-Pacific region saw oil consumption rise by over 5 percent to 38 million barrels per day, while China’s refining capacity surpassed that of the United States for the first time, making the country the largest oil refining market by capacity,” the press release said.

The Middle East, with its significant oil reserves, saw increased activity, helping global oil consumption to exceed 100 million barrels per day for the first time. This upturn was particularly pronounced in the Asia-Pacific region, where oil demand rose by over 5 percent to 38 million barrels per day.

While China’s energy sector experienced remarkable growth, the US energy sector recorded higher throughput, with an overall utilization rate of 86.6 percent compared to the Asian country’s 81.7 percent.

Natural gas prices saw significant declines in Europe and Asia, falling 30 percent from their 2022 peak. However, global gas production remained relatively stable. The United States became the largest exporter of liquefied natural gas, overtaking Qatar, with the Asia-Pacific region, particularly China and India, driving rising demand.

The report found that the European gas market experienced a significant change in 2023. European gas demand fell by 7 percent, after already falling by 13 percent in the previous year.

Russia’s share of EU gas imports fell to 15 percent from 45 percent in 2021 as LNG imports exceeded pipeline gas imports for the second year in a row.

This reorientation of gas supplies was significantly influenced by the ongoing conflict in Ukraine, which has prompted European countries to look for alternative energy sources.

Fuel, renewable energy and electricity

Renewable energy continued to grow rapidly, growing six times the size of total primary energy consumption, according to the Energy Institute, KPMG and Kearney.

The Middle East and Asia contributed to a 25 percent increase in global electricity demand. China’s grid-scale battery storage capacity, which accounted for nearly 50 percent of the global total, exemplified the region’s push toward sustainable energy solutions.

Fossil fuel consumption appears to have peaked in industrialized countries. In Europe, consumption fell below 70 percent of primary energy for the first time since the Industrial Revolution, reflecting lower demand and the growth of renewable energy. In the United States, fuel consumption fell to 80 percent of total primary energy.

EI CEO Nick Wayth pointed out that while the transition is progressing slowly, there are different energy developments in all regions.

“In developed countries, we are seeing signs that demand for fossil fuels is peaking. In contrast, in the economies of the global South, economic development and improving quality of life continue to drive growth in fossil fuels,” he said.

However, it is challenging for emerging economies to curb fuel consumption. In India, for example, fuel consumption increased by 8 percent and now accounts for 89 percent of total energy consumption.

For the first time, India consumed more coal than Europe and North America combined. In Africa, primary energy consumption fell by 0.5 percent. 90 percent of total electricity came from fossil fuels and 6 percent from renewable energy sources.

China’s recovery from the COVID-19 pandemic led to a six percent increase in fuel consumption, even though its share of primary energy has been declining since 2011 and will reach 81.6 percent in 2023.

The Asian energy powerhouse was also responsible for 55 percent of the global expansion of renewable energy and overtook Europe for the first time in terms of per capita energy consumption.

“In developed countries, we are seeing signs that demand for fossil fuels is peaking. In contrast, there is a contrast in countries in the global South, where economic development and improving quality of life continue to drive growth in fossil fuels,” said Wayth.

EI’s CEO added: “The transition is progressing slowly, but behind the bigger picture are different energy stories playing out in different regions.”

The EI Statistical Review of World Energy has been an important source of information since 1952 and provides comprehensive data on global energy markets.

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